- State of the Market Address:
- The Dow remains well above 23,000.
- Shiller's Adjusted S&P P/E ratio is now at 31.51 Now at arguably the highest level in history (if we adjust for 2000 distortions) and still above 1929 top of 29.55.
- Weekly RSI at 77 - overbought. Daily RSI is at 59- neutral.
- Prior years corrections terminated at around 200 day moving average. Located at around 18,300 today (on weekly).
- Weekly Stochastics at 90 - overbought. Daily at 48 - neutral.
- NYSE McClellan Oscillator is at +3. Neutral.
- Volatility measures VIX/VXX remains at suppressed levels. Commercial VIX long interest declined slightly to 75K contracts net long.
- Last week's CTO Reports suggest that commercials (smart money) are shifting their positioning back to net short. Short interest has shifted slightly lower during the week. For now, the Dow is 7X, the S&P is at 2X net short, Russell 2000 is now at 5.5X net short and the Nasdaq is net neutral.
In summary: For the time being and long-term, the market remains in a clear bull trend. Yet, a number of longer-term indicators suggest the market might experience a substantial correction ahead. Plus, the "smart money" is positioning for some sort of a sell-off.
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